For the quarter ended September 30, 2014, net income rose by 19.1% to $8.0 million compared to $6.7 million in the third quarter of 2013. Operating income was $14.1 million, up from $13.3 million in the same quarter last year. Adjusted OIBDA (Operating Income Before Depreciation and Amortization) increased 15.9% to $33.3 million in the third quarter of 2014 from $28.7 million in the third quarter of 2013.

Total revenues were $82.3 million, an increase of 6.1% compared to $77.5 million for the 2013 third quarter. The increase in revenue was largely attributable to growth in subscribers and revenue per subscriber. Total operating expenses were $68.1 million in the third quarter of 2014 compared to $64.3 million in the prior year period. Cost of goods sold increased $1.6 million, including increases of $0.9 million in cable programming costs, $2.0 million in costs to dispose of equipment taken out of service when the company’s cable and wireline networks were upgraded, and $1.2 million in wireless handset costs. These increases were partially offset by reductions in network costs and maintenance expenses resulting from increases in the percentage of labor capitalized to projects. Selling, general and administrative expenses increased $0.6 million. Depreciation and amortization expense increased $1.7 million, primarily due to completion of the Network Vision upgrade project.

President and CEO Christopher E. French commented, "Our upgraded networks and enhanced service drove strong third quarter results as we recognized revenue and subscriber growth in both the cable and wireless segments. We have continued to aggressively market our offerings in the regions in which we operate and we’re pleased to see those efforts pay off in the form of increased average revenue per customer.”

Wireless Segment

Revenues in the wireless segment increased 4.5% to $48.0 million as compared to the third quarter of 2013. Net postpaid service revenues increased $1.8 million as a result of 4.8% growth in average customers. The net service fee to Sprint increased from 12% of net billed revenues to 14% on August 1, 2013; this increase reduced net postpaid service revenue by $0.3 million. During the third quarter, net prepaid service revenues grew $0.3 million, or 2.7%, due to growth in average prepaid subscribers as compared to the same period of 2013.

During the third quarter of 2014, net additions to postpaid subscribers were 5,303, an increase of close to 300% as compared to net additions in the third quarter of 2013. Net additions to prepaid subscribers were 1,950, an increase of 50% compared to the third quarter of 2013.

Operating expenses in the Wireless segment increased by $1.8 million in the third quarter of 2014 compared to the third quarter last year. Postpaid handset costs increased $0.5 million in the third quarter as a higher volume of handset upgrades and tablet sales was offset by reduced volume in subsidized handsets. Prepaid handset subsidies increased $0.6 million on higher costs per addition, partially offset by fewer upgrades. Network costs decreased by $0.8 million, primarily due to a $0.5 million decrease in backhaul costs following the completion of the Company’s Network Vision upgrade. Selling costs increased

$0.3 million, while depreciation expenses increased $1.1 million.

Third quarter adjusted OIBDA in the wireless segment was $25.3 million, an increase of $1.9 million or 8.0% as compared to the third quarter of 2013.

“We experienced solid growth in revenue in our wireless segment with significant increases in both postpaid and prepaid customer counts. Our ability to continue to grow our customer base is a result of effective marketing of our improved network to wireless subscribers who were previously customers of our competitors. Additionally, our long time partnership with Sprint allows us to leverage their national advertising efforts and reinforces our local marketing activities,” stated Mr. French.

Cable Segment

Service revenue in the cable segment increased $1.2 million as a result of a 6.7% increase in average RGUs (the sum of voice, data, and video subscribers), customers selecting higher speed data access packages, and video rate increases in January 2014. Cost of goods and services sold increased by $1.9 million in third quarter 2014 over third quarter 2013, due largely to increased disposal costs of $1.3 million as the Company disposed of obsolete equipment following its network upgrade. During the quarter the company experienced increased cable programming costs of $0.9 million as rising rates per subscriber outpaced declining video subscriber counts. Maintenance costs decreased $0.3 million related to a reduction in network maintenance costs.

Revenue generating units totaled 120,466 at the end of the third quarter of 2014, an increase of 7.3% over the prior year period. For the third quarter, cable segment net additions totaled 4,245, an increase of 50% from 2,817 in the third quarter of 2013. Included in the 2014 total were 648 video net additions, versus a decrease of nine in the 2013 period.

Adjusted OIBDA in the cable segment for third quarter 2014 was $3.4 million, up 75.2% from $1.9 million in the third quarter of 2013.

Mr. French stated, “Consumers have high expectations around the performance of their cable network and we continue to see increases in revenue generating units as demand for high speed internet outpaces the anticipated decrease in legacy video subscribers. By updating our network to a reliable, high speed solution and by expanding our offerings, we’ve been able to grow our customer base by capturing new cable customers while also retaining existing cable customers.”

Wireline Segment

Operating income for the wireline segment was $4.4 million as compared to $3.5 million in third quarter 2013. Access lines at September 30, 2014, were 21,742, compared to 22,257 at September 30, 2013.

Adjusted OIBDA for the wireline segment for third quarter 2014 increased to $7.9 million, as compared to

$6.5 million in third quarter 2013.

Other Information

Capital expenditures were $18.4 million in the third quarter of 2014, compared to $32.3 million in the comparable 2013 period.

Cash and cash equivalents as of September 30, 2014 were $78.6 million, compared to $38.3 million at December 31, 2013. Total outstanding debt at September 30, 2014 totaled $230.0 million. The Company will begin making quarterly principal payments of $5.75 million on its debt in December 2014. At September 30, 2014, debt as a percent of total assets was 37.4%. The amount available to the Company through its revolver facility was $50 million as of September 30, 2014.

“Our balance sheet is robust and as expected, our capital expenditures have lessened with the completion of our Network Vision 4G build out and cable system upgrades. We believe our updated networks and services position us well to expand our customer base and drive both organic and inorganic growth,” Mr. French concluded.

Conference Call and Webcast

The Company will host a conference call and simultaneous webcast today, Friday, October 31, 2014, at 9

This release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen factors. A discussion of factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations is available in the Company filings with the SEC. Those factors may include changes in general economic conditions, increases in costs, changes in regulation and other competitive factors.

Total current liabilities, including current maturities of long-term debt

57,146

43,994

Long-term debt, less current maturities

207,000

224,250

Total other liabilities

89,793

94,447

Total shareholders' equity

260,673

234,315

Total liabilities and shareholders' equity

$ 614,612

$ 597,006

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2014 2013 2014 2013

Operating revenues $ 82,268 $ 77,513 $ 244,136 $ 230,976

Cost of goods and services 33,330 31,778 97,970 93,006

Selling, general and administrative 18,063 17,481 51,836 49,966

Depreciation and amortization 16,731 14,992 48,714 45,034

Total operating expenses 68,124 64,251 198,520 188,006

Operating income 14,144 13,262 45,616 42,970

Other income (expense):

Interest expense (2,007) (2,050) (6,119) (6,270)

Gain(loss) on investments, net 239 348 335 526

Non-operating income, net 409 377 1,496 1,356

Income before taxes 12,785 11,937 41,328 38,582

Income tax expense 4,782 5,220 16,094 15,672

Net income $ 8,003 $ 6,717 $ 25,234 $ 22,910

Net income per share, basic $ 0.33 $ 0.28 $ 1.05 $ 0.95

Net income per share, diluted $ 0.33 $ 0.28 $ 1.04 $ 0.95

Weighted average shares outstanding:

Basic 24,113 24,010 24,091 23,993

Diluted 24,393 24,125 24,334 24,078

Non-GAAP Financial Measure

In managing our business and assessing our financial performance, management supplements the information provided by financial statement measures prepared in accordance with GAAP with adjusted OIBDA, which is considered a “non-GAAP financial measure” under SEC rules.

Adjusted OIBDA is defined by us as operating income (loss) before depreciation and amortization, adjusted to exclude the effects of: certain non-recurring transactions; impairment of assets; gains and losses on asset sales; and share based compensation expense. Adjusted OIBDA should not be construed as an alternative to operating income as determined in accordance with GAAP as a measure of operating performance.

In a capital-intensive industry such as telecommunications, management believes that adjusted OIBDA and the associated percentage margin calculations are meaningful measures of our operating performance. We use adjusted OIBDA as a supplemental performance measure because management believes it facilitates comparisons of our operating performance from period to period and comparisons of our operating performance to that of other companies by excluding potential differences caused by the age and book depreciation of fixed assets (affecting relative depreciation expenses) as well as the other items described above for which additional adjustments were made. In the future, management expects that the Company may again report adjusted OIBDA excluding these items and may incur expenses similar to these excluded items. Accordingly, the exclusion of these and other similar items from our non-GAAP presentation should not be interpreted as implying these items are non-recurring, infrequent or unusual.

While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the current period allocation of costs associated with long- lived assets acquired or constructed in prior periods, and accordingly may obscure underlying operating trends for some purposes. By isolating the effects of these expenses and other items that vary from period to period without any correlation to our underlying performance, or that vary widely among similar companies, management believes adjusted OIBDA facilitates internal comparisons of our historical operating performance, which are used by management for business planning purposes, and also facilitates comparisons of our performance relative to that of our competitors. In addition, we believe that adjusted OIBDA and similar measures are widely used by investors and financial analysts as measures of our financial performance over time, and to compare our financial performance with that of other companies in our industry.

Adjusted OIBDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. These limitations include the following:

it does not reflect capital expenditures;

many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements;

it does not reflect costs associated with share-based awards exchanged for employee services;

it does not reflect interest expense necessary to service interest or principal payments on indebtedness;

it does not reflect gains, losses or dividends on investments;

it does not reflect expenses incurred for the payment of income taxes; and

other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure.

In light of these limitations, management considers adjusted OIBDA as a financial performance measure that supplements but does not replace the information reflected in our GAAP results.

The following table shows adjusted OIBDA for the three and nine months ended September 30, 2014 and 2013:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands) 2014 2013 2014 2013

Adjusted OIBDA $ 33,253 $ 28,703 $ 97,991 $ 89,597

The following table reconciles adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure, for the three and nine months ended September 30, 2014 and 2013:

Consolidated:

(in thousands)

Three Months Ended September 30,

2014

2013

2014 20

13

Operating income

$ 14,144

$ 13,262

$ 45,616 $ 42,970

Plus depreciation and amortization

16,731

14,992

48,714 45,034

Plus (gain) loss on asset sales

2,053

18

1,811

252

Plus share based compensation expense

325

431

1,850 1,

341

Adjusted OIBDA

$ 33,253

$ 28,703

$ 97,991 $ 89,597

ded

,

The following tables reconcile adjusted OIBDA to operating income by major segment for the three and nine months ended September 30, 2014 and 2013:

Wireless Segment:

(in thousands)

Three Months Ended September 30,

2014

2013

2014 20

13

Operating income

$ 17,333

$ 16,497

$ 51,697 $ 4

9,270

Plus depreciation and amortization

7,895

6,799

23,162 2

0,608

Plus (gain) loss on asset sales

-

-

(293)

100

Plus share based compensation expense

67

123

387

385

Adjusted OIBDA

$ 25,295

$ 23,419

$ 74,953 $ 7

0,363

ed

Cable Segment:

(in thousands)

Three Months Ended September 30,

2014

2013

2014 2013

Operating income (loss)

$ (4,124)

$ (3,537)

$(8,170) $(8,359)

Plus depreciation and amortization

5,864

5,312

17,035 1

5,996

Plus (gain) loss on asset sales

1,512

(35)

1,528

(26)

Plus share based compensation expense

125

187

699

585

Adjusted OIBDA

$ 3,377

$ 1,927

$ 11,092 $

8,196

ed

Wireline Segment:

(in thousands)

Three Months Ended September 30,

2014

2013

2014 20

13

Operating income

$ 4,438

$ 3,488

$ 12,551 $ 1

1,332

Plus depreciation and amortization

2,875

2,872

8,225

8,405

Plus loss on asset sales

541

53

575

177

Plus share based compensation expense

45

92

311

284

Adjusted OIBDA

$ 7,899

$ 6,505

$ 21,662 $ 2

0,198

ded

,

Supplemental Information

Subscriber Statistics

The following tables show selected operating statistics of the Wireless segment as of the dates shown:

September

December

September

December

30, 2014

31, 2013

30, 2013

31, 2012

Retail PCS Subscribers - Postpaid

282,976

273,721

267,667

262,892

Retail PCS Subscribers - Prepaid

140,126

137,047

132,669

128,177

PCS Market POPS (000) (1)

2,410

2,397

2,395

2,390

PCS Covered POPS (000) (1)

2,116

2,067

2,065

2,057

CDMA Base Stations (sites)

531

526

525

516

Towers

154

153

153

150

Non-affiliate cell site leases (2)

197

217

221

216

Three Months Ended Nine Months Ended

September 30, September 30,

2014 2013 2014 2013

Gross PCS Subscriber Additions - Postpaid

20,095

15,754

51,578

46,762

Net PCS Subscriber Additions - Postpaid

5,303

1,370

9,255

4,775

Gross PCS Subscriber Additions - Prepaid

18,225

17,572

52,683

57,301

Net PCS Subscriber Additions(Losses) - Prepaid

1,950

1,297

3,079

4,483

PCS Average Monthly Retail Churn % - Postpaid (3)

1.76%

1.80%

1.70%

1.76%

PCS Average Monthly Retail Churn % - Prepaid (3)

3.92%

4.11%

3.99%

4.45%

POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the Company’s network.

The decrease from December 31, 2013 to September 30, 2014 is a result of expected terminations of Sprint iDEN leases associated with the former Nextel network.

PCS Average Monthly Retail Churn is the average of the monthly subscriber turnover, or churn, calculations for the period.

The following table presents selected operating statistics of the Cable segment as of the dates shown:

September 30,

December 31,

September 30,

December 31,

2014

2013

2013

2012

Homes Passed (1)

171,382

170,470

168,746

168,475

Customer Relationships (2)

Video customers

49,672

51,197

51,529

52,676

Non-video customers

21,630

18,341

17,687

15,709

Total customer relationships

71,302

69,538

69,216

68,385

Video

Customers (3)

52,347

53,076

53,386

54,840

Penetration (4)

30.5%

31.1%

31.6%

32.6%

Digital video penetration (5)

64.8%

49.2%

48.7%

39.5%

High-speed Internet

Available Homes (6)

170,728

168,255

166,898

163,273

Customers (3)

50,626

45,776

44,583

40,981

Penetration (4)

29.7%

27.2%

26.7%

25.1%

Voice

Available Homes (6)

167,991

163,282

161,932

154,552

Customers (3)

17,493

14,988

14,338

12,262

Penetration (4)

10.4%

9.2%

8.9%

8.0%

Total Revenue Generating Units (7)

120,466

113,840

112,307

108,083

Total Fiber Miles (8)

71,022

69,715

41,562

39,418

Fiber Route Miles

2,473

2,446

2,237

2,077

Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines. Homes passed is an estimate based upon the best available information.

Customer relationships represent the number of customers who receive at least one of our services.

Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer. Where services are provided on a bulk basis, such as to hotels and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above.

Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate.

Digital video penetration is calculated by dividing the number of digital video customers by total video customers. Digital video customers are video customers who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video customer.

Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area.

Revenue generating units are the sum of video, voice and high-speed internet customers.

Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. Fiber counts were recalculated after a fiber audit and deployment of enhanced mapping software in the fourth quarter of 2013.

The following table presents selected operating statistics of the Wireline segment as of the dates shown:

September 30,

December 31,

September 30,

December 31,

2014

2013

2013

2012

Telephone Access Lines

21,742

22,106

22,257

22,342

Long Distance Subscribers

9,645

9,851

9,920

10,157

Video Customers

5,787

6,342

6,405

6,719

DSL Subscribers

12,708

12,632

12,559

12,611

Total Fiber Miles (1)

85,398

85,135

84,487

84,107

Fiber Route Miles

1,454

1,452

1,434

1,420

1. Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision makers. The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Cable, and (3) Wireline. A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company.

The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers.

The Cable segment provides video, internet and voice services in Virginia, West Virginia and Maryland. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia.

The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video services throughout Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of Pennsylvania.

Three months ended September 30, 2014

(in thousands)

Wireless

Cable

Wireline

Other

Eliminations

Consolidated Totals

External revenues

Service revenues

$ 48,013

$ 17,602

$ 5,102

$ -

$ -

$ 70,717

Other

3,083

3,370

5,098

-

-

11,511

Total external revenues

51,096

20,972

10,200

-

-

82,268

Internal revenues

1,099

32

5,724

-

(6,855)

-

Total operating revenues

52,195

21,004

15,924

-

(6,855)

82,268

Operating expenses

Costs of goods and services, exclusive of depreciation and amortization shown separately below

18,322

14,157

7,078

-

(6,227)

33,330

Selling, general and administrative, exclusive of depreciation and amortization shown separately below

8,645

5,107

1,533

3,406

(628)

18,063

Depreciation and amortization

7,895

5,864

2,875

97

-

16,731

Total operating expenses

34,862

25,128

11,486

3,503

(6,855)

68,124

Operating income (loss)

17,333

(4,124)

4,438

(3,503)

-

14,144

Three months ended September 30, 2013

(in thousands)

Wireless

Cable

Wireline

Other

Eliminations

Consolidated Totals

External revenues

Service revenues

$ 45,938

$ 16,415

$ 5,075

$ -

$ -

$ 67,428

Other

2,550

2,706

4,829

-

-

10,085

Total external revenues

48,488

19,121

9,904

-

-

77,513

Internal revenues

1,090

19

5,127

-

(6,236)

-

Total operating revenues

49,578

19,140

15,031

-

(6,236)

77,513

Operating expenses

Costs of goods and services, exclusive of depreciation and amortization shown separately below

17,969

12,218

7,214

-

(5,623)

31,778

Selling, general and administrative, exclusive of depreciation and amortization shown separately below

8,313

5,147

1,457

3,177

(613)

17,481

Depreciation and amortization

6,799

5,312

2,872

9

-

14,992

Total operating expenses

33,081

22,677

11,543

3,186

(6,236)

64,251

Operating income (loss)

16,497

(3,537)

3,488

(3,186)

-

13,262

Nine months ended September 30, 2014

(in thousands)

Wireless

Cable

Wireline

Other

Eliminations

Consolidated Totals

External revenues

Service revenues

$ 143,112

$ 52,442

$ 15,322

$ -

$ -

$ 210,876

Other

8,653

9,788

14,819

-

-

33,260

Total external revenues

151,765

62,230

30,141

-

-

244,136

Internal revenues

3,283

91

17,202

-

(20,576)

-

Total operating revenues

155,048

62,321

47,343

-

(20,576)

244,136

Operating expenses

Costs of goods and services, exclusive of depreciation and amortization shown separately below

55,455

38,969

22,297

-

(18,751)

97,970

Selling, general and administrative, exclusive of depreciation and amortization shown separately below

24,734

14,487

4,270

10,170

(1,825)

51,836

Depreciation and amortization

23,162

17,035

8,225

292

-

48,714

Total operating expenses

103,351

70,491

34,792

10,462

(20,576)

198,520

Operating income (loss)

51,697

(8,170)

12,551

(10,462)

-

45,616

Nine months ended September 30, 2013

(in thousands)

Wireless

Cable

Wireline

Other

Eliminations

Consolidated Totals

External revenues

Service revenues

$136,365

$ 48,902

$ 15,353

$ -

$ -

$ 200,620

Other

7,897

7,364

15,095

-

-

30,356

Total external revenues

144,262

56,266

30,448

-

-

230,976

Internal revenues

3,238

121

14,935

-

(18,294)

-

Total operating revenues

147,500

56,387

45,383

-

(18,294)

230,976

Operating expenses

Costs of goods and services, exclusive of depreciation and amortization shown separately below

53,354

34,679

21,577

-

(16,604)

93,006

Selling, general and administrative, exclusive of depreciation and amortization shown separately below